Pakistan plans return to International Islamic Bond market

Pakistan plans to raise 79.1 billion rupees ($756 million) via sovereign Islamic bonds, or sukuk, in the fiscal year ending June 2017, as part of a budget aimed at shoring up the country’s finances.

A potential sale of foreign currency sukuk would be the first since the government raised $1 billion via five-year sukuk in late 2014, after opting out of the market last year.

The government also plans to raise 47.7 billion rupees in concessional loans from the Saudi-based Islamic Development Bank ISDBA.UL, below the 92.3 billion rupees raised from the multilateral institution in the 2015-2016 fiscal year.

This compares to government plans to raise 105.5 billion rupees via sovereign bonds in the new budget, up from 52.2 billion raised in the previous fiscal year.

In February, the central bank also expanded its issuance of local currency sukuk, auctioning 100 billion rupees worth of three-year paper, injecting a much-needed tool for the country’s fast-growing Islamic banking sector.

($1 = 104.6300 Pakistani rupees)